QUANTARIUM’S TERRAINDEX™ IS CHALLENGING CASE-SHILLER
Quantarium, a Seattle-headquartered national real estate AI technology firm, is challenging the notion that real estate professionals need to wait months to gauge how home prices are evolving.
Will Quantarium’s TerraIndex™ take over as the gold standard in Home Price Indexes?
THE CONVENTIONAL LAG IN HOME PRICE REPORTING
Traditionally, the real estate industry waits anywhere from 30-60 days for Home Price Indexes (HPIs), whether from Black Knight, CoreLogic, or the S&P/Case-Shiller HPI.
For example, in February of this year, there was a shift in the housing market, when a seven-month-long trend of home price depreciation reversed. The Case-Shiller Home Price Index wasn’t released until April 25, approximately seven weeks later, showcasing the reversal.
The Quantarium’s TerraIndex™ HPI was released March 8, only eight days after the month ended.
Source: Quantarium
Quantarium’s TerraIndex™ HPI has existed for several years, serving as a component of the company’s proprietary Automated Valuation Model (QVM). This AVM is widely utilized by lenders and various institutions throughout the United States, providing estimates for over 100 million residential properties in the country.
This year, after watching the ups and downs of the housing market since 2020, it started to release its HPI to the public — with a much faster turnaround than other models.
TERRAINDEX™ HPI VS. CASE-SHILLER
According to John Smintina, Ph.D., Chief Analytics Officer and Quantarium Co-Founder, the difference in reporting time between Case Shiller and Quantarium’s TerraIndex™HPI is attributed to their respective methodologies. The Case-Shiller Index relies on repeat sales data and presents a three-month moving average, leading to a two-month lag in reporting HPI results for a specific month.
On the other hand, Quantarium employs a more frequent approach. It recomputes estimated values for the entire national area on a weekly basis and generates HPIs at various geographic levels, including State, County, CBSA, Zip Code, and Census Tract. Quantarium leverages its industry-leading Data Services Platform (QDSP) to facilitate this rapid processing.
As a result, Quantarium’s TerraIndex™ HPI report for a specific month is usually available on the second Wednesday of the following month. For example, the HPIs for May and June were made public on June 14 and July 12, respectively.
The TerraIndex™ HPI report shares numerous similarities with other national HPI-based reports that monitor house prices and trends, like the Case-Shiller National Home Price Index, the Black Knight Mortgage Monitor Report, and the Core Logic indices. These reports all rely on vast amounts of mortgage, public records, and MLS data as the basis for their analyses. Because of these similarities, all four models highlight the same trends:
The national home price indices exhibit a consistent pattern in both charts during Q1 2023. Year over year, prices are rising, but the rate of increase is gradually slowing down each month. Month over month, non-seasonally adjusted prices experienced a significant change, breaking away from their seven-month-long negative trend in February 2023 and showing accelerated growth in March.
IMPORTANCE OF RECENCY IN HOUSING MARKET REPORTS
The demand for market reports that are both up-to-date and accurate is more crucial than ever. Industry professionals rely on precise information to make informed decisions. A lag in reporting can lead to missed opportunities or ill-timed decisions, potentially resulting in financial losses or missed chances to capitalize on favorable market conditions.
There is a need for accuracy in market reports. Only accurate data can lead to accurate assessments. But, in today’s fast-paced market, waiting for those accurate reports can also create issues.
